America’s biopharmaceutical industry dwarfs most other economic sectors. It’s one of our nation’s single largest job creators, supporting close to a million positions across the country. And its products save countless lives each year.
Yet for some reason, politicians in both parties seem determined to snuff it out by imposing crippling price controls on medicines. That would be a disaster for employees and patients alike.
The industry also generates millions of high-paying jobs. Drug companies directly employed more than 811,000 Americans and indirectly supported more than 3 million others in 2017. A third of those jobs are coveted science, technology, engineering, and math positions—the occupations of the future. And average compensation in the industry exceeded $126,500 per worker in 2017. That’s more than twice the U.S. private sector average of $60,705.
Of course, the industry isn’t just an economic powerhouse. It’s also the global leader in medical innovation, producing half of the world’s new medicines. Right now, U.S. researchers are working on more than 4,500 new clinical trials.
Despite these successes, drug development remains an expensive and risky venture. The White House Council of Economic Advisers estimates the cost of developing a single new drug at $2 billion. Firms generally dedicate 15 to 20 percent of their revenues to drug development.
But now some lawmakers want to weaken the industry responsible for this economic growth and medical innovation. The recent drug pricing bill passed by the House, H.R. 3, would empower the government to cap the price of 250 common brand-name drugs. The prices could not exceed 120 percent of the average prices paid in six other developed countries with government-dominated health systems, including Canada, France, and the United Kingdom.
Meanwhile, the Senate Finance Committee is pushing its own price control bill. The legislation would bar companies from raising prices faster than the rate of inflation. And it would effectively levy taxes on drug companies by increasing their cost-sharing liability in Medicare’s prescription drug benefit. All told, the bill would cost biopharmaceutical firms $100 billion over the next 10 years.
Once these price controls, taxes, and other penalties begin depleting their revenue, firms will curtail research and development—and thus lay off American workers. According to a recent poll, 45 percent of drug firms stated that “significant” reductions in research and development could force immediate job cuts and facility closures.
Let’s hope our leaders in Washington reconsider proposals that would cripple one of America’s largest and most innovative industries—and leave patients without the lifesaving drugs they need.
